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A 17-year, $1,000 par value zero-coupon rate bond is to be issued to yield 7 percent. a . What should be the initial price of the bond?

 

 A 17-year, $1,000 par value zero-coupon rate bond is to be issued to yield 7 percent.

 

a.    What should be the initial price of the bond? (Take the present value of $1,000 for 17 years at 7 percent, using Appendix B.)

b.    If immediately upon issue, interest rates dropped to 6 percent, what would be the value of the zero-coupon rate bond?

c.    If immediately upon issue, interest rates increased to 9 percent, what would be the value of the zero-coupon rate bond?

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3 comments
  • what is the "intial price of bond" fromula .....
    • athenabryant4
    • Apr 04, 2018 at 9:18pm
  • is it PV (Rate x 17x0x1000)??
    • athenabryant4
    • Apr 04, 2018 at 9:19pm
  • Initial Price of the Bond = PV(Rate,Nper,PMT,FV)
    • mokech
    • Apr 04, 2018 at 9:23pm

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